Question

Vernon Manufacturing Company produces a single product. The following data apply to the standard cost of materials and labor associated with making the product: Materials quantity per unit Materials price Labor quantity per unit Labor price 1 pound $ 6.60 per pound 2 hours $10.60 per hour During the year, the company made 2,120 units of product. At the end of the year, the following variances had been calculated. Materials usage variance Materials price variance Labor usage variance Labor price variance $1,584 Favorable $ 188 Unfavorable $3,816 Unfavorable $3,910 Favorable Required a. Determine the actual amount of materials used. b. Determine the actual price paid per pound for materials. (Round your answer to 2 decimal places.) c. Determine the actual labor hours used. d. Determine the actual labor price per hour. (Round your answer to 2 decimal places.) pounds per pound Actual quantity Actual price ( materials) C. Actual labor hours d. Actual labor price per hour

Answer 1

a. Materials usage variance = (Actual quantity * Standard price) - (Standard quantity * Standard price)

($1,584) = (Actual quantity * $6.6) - [(2,120*1) * $6.6]

($1,584) = (Actual quantity * $6.6) - $13,992

(Actual quantity * $6.6) = $12,408

Actual quantity = 1,880 pounds

b. Materials price variance = (Actual quantity * Actual price) - (Actual quantity * Standard price)

$188 = (1,880 * Actual price) - (1,880 * $6.6)

$188 = (1,880 * Actual price) - $12,408

(1,880 * Actual price) = $12,596

Actual price = $6.7

c. Labor usage variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)

$3,816 = (Actual hours * $10.6) - [(2,120*2) * $10.6]

$3,816 = (Actual hours * $10.6) - $44,944

(Actual hours * $10.6) = $48,760

Actual hours = 4,600

d. Labor price variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)

($3,910) = (4,600 * Actual rate) - (4,600 * $10.6)

($3,910) = (4,600 * Actual rate) - $48,760

(4,600 * Actual rate) = $44,850

Actual rate = $9.75